This is the biggest trend in the hedge fund world right now

IBM
The humans are losing, the computers are winning, and the hedge fund game is changing.

The hot topic in hedge fund land right now is the rise of the computer-driven investing, or funds that use complex mathematical models to bet on markets.

It seems to be the trend of the day at a time when many traditional hedge funds are getting crushed. And some indicators show that they are taking in investor money from other strategies.

A Goldman Sachs report obtained by Business Insider, for instance, says that quant/relative value strategies are seeing increased interest from investors. One in five Americas-based investors noted they were looking for systematic strategies in the second quarter, the report said. That's a big increase from a year ago, when only 13% of investors were interested.

And in a report out earlier this month, Barclays found that investors in hedge funds are most interested in systematic/CTA funds and quant equity funds right now.

An investor quote from the Barclays survey.
Barclays
High-profile quant funds have launched, too. Schonfeld Strategic Advisors, a multibillion-dollar family office and hedge fund, backed a new quant firm earlier this month. A former First Boston CEO and Bank of America director are setting up a new quant fund, HFM Week reported.

Some existing smaller managers say they are benefiting from the shift, getting more checks from investors.

"As in 2008 and 2011, we suspect this environment will be challenging for the levered beta riders (aka fundamental [equity long-short] stock pickers) but should be supportive of the quant process driven discipline," Milind Sharma, who manages a quant strategy at his New York firm QuantZ Capital, told Business Insider.

Respondents to a Barclays survey said they had an interest in quant funds.
Barclays

The interest in quant strategies has been playing out for a while and has been driven at least in part by performance. One of Sharma's funds, for instance, was up 19.1% and 9.9% in 2015 and 2014, respectively, according to an investor update. It's down 7% this year, but the firm is still gaining interest, Sharma said.

This is opening new doors for quant traders and forcing the old guard to adapt.

The Financial Times' Robin Wigglesworth profiled do-it-yourself quant traders on programs like Quantopian, a quant platform that Steve Cohen has invested in. One of the Quantopian traders helps run a London-based Mexican restaurant chain by day and does quant investing — for which he had to train himself in Python code — by night.

Some of the biggest names in the hedge fund industry are having to adapt.

Paul Tudor Jones, who is cutting 15% of his firm amid underperformance and investor withdrawals, has been contemplating using more computer models in investing.